The greatest broadband FMS potential exists where demand and affordability combine
In 2015, approximately 1 billion people worldwide will use big- or small-screen mobile broadband as their primary form of Internet access. This accounts for 28% of all broadband users globally, and 13% of the world’s population. While these are significant numbers, broadband FMS will be a minority access method compared to FMC.
The primary driver for FMS is a lack of fixed-line infrastructure. However, the affordability of devices and the availability of sufficiently capable mobile networks are a prerequisite for FMS penetration. Therefore, the largest opportunities for broadband FMS will exist in emerging markets in Eastern Europe (where 38% of broadband users will be mobile-only in 2015), South and Central America (35%), and Asia-Pacific (34%).
Operators adopting a substitution strategy in developed markets will be forced to target niche segments. Their primary target will be users requiring low-end connectivity, but these users will provide lower returns.
Integrated players need to take a pragmatic approach to broadband FMS, particularly in emerging markets. For some operators, it may be more cost-effective to serve areas with no broadband access with mobile technologies, which will have a major impact on the marketing messages presented.
FMC maximizes revenue potential
In 2015, approximately 1.4 billion people will have access to broadband through both fixed and mobile networks. The majority (84%) of these customers will be from developed markets in North America, Western Europe, and Asia-Pacific.
The increase in “dual-access subscribers” will drive a new generation of increasingly sophisticated service bundles that bring added value to FMC customers and additional revenues to service providers. However, this opportunity will not be limited to developed markets. There will also be a market for broadband FMC bundles and services in emerging markets, particularly in rapidly growing urban areas where there is a larger proportion of high-value customers. Service providers in emerging markets will have to work hard to develop the right marketing and tariff strategies if they are to maximize the FMC market. In addition, these players must also provide cost-effective mobile broadband services to the low-end, but larger, FMS segment.
As with any type of service bundling, the revenue benefits from broadband FMC bundled services can only last for so long. Eventually, customer growth will slow and price competition will drive ARPU down. Therefore, if integrated operators are to continue driving revenue growth, they must eventually look beyond the basic bundle.